|SPORE Bulletin of the CTA No. 20 (CTA Spore, 1989, 16 p.)|
As local consumer tastes for wheat-based products in food-deficit countries have been developed, prices have often been kept artificially low by governments and subsidies provided by producer-exporters. The United States government subsidized its wheat farmers by $4 billion in t983, and the EEC by $2 billion.
If the EEC does not change it policy, 60 million tonnes of surplus cereals will be produced by the year 2000, in addition to present surpluses. These amounts are likely to increase substantially due to the impact of new biotechnologies. Export markets are already huge: in 1984 for example, Egypt alone imported $1.6 billion of wheat, and competition in these markets will increase in future.
Governments in the tropics will have to pay close attention to domestic food-pricing policies, food aid, import guidelines and to the promotion of using locally grown and processed foods if any fledgling wheat farming system is to be successful. Policies adopted by the major wheat-exporting countries will also be a major factor in determining whether wheat does indeed become a significant crop in the tropics.
Supply and demand -making the most of export opportunities
Poor marketing and distribution frequently waste opportunities provided by increased or diversified agricultural production There are many examples where farmers have produced higher yields or cultivated new crops at their own expense and risk but have not benefited from any increased income. Instead, they may have suffered financial loss from investing in higher inputs or labour. It is not surprising that farmers become disappointed and revert to less onerous and risky production strategies to meet local needs only. This limits their income and stifles the development of a rural economy. It also deprives the country of much-needed food for the cities and of products to export for foreign exchange.
Many, governments have now recognized the need for improved marketing, distribution and exports. One particularly successful example is the Dominica Export Import Agency (DEXIA), which was set up by the Government of Dominica in July 1986. In less than three years it has achieved some dramatic results.
DEXIA is responsible for issuing licences for the import of basic food commodities such as rice and sugar. So it controls imports, allowing local production to satisfy the domestic market first. However, DEXIA's main objective is to encourage, help and provide facilities for the private sector in Dominica to increase exports of vegetables, fruit, flowers and handicrafts. There are 20-25 commodities currently exported and DEXIA has prayed an important, sometimes crucial, role in finding or developing markets for them
Bananas are the main crop in Dominica; they are marketed through the Banana Marketing Corporation. Similarly, the bulk of coconut production is processed by Dominica Coconut Products, which manufactures a wide range of value-added coconut-based products including coconut oil and soaps. But green water nuts or jelly nuts, which previously were sold only locally, are now exported by a co-operative of growers which was formed originally to export plantains.
DEXIA staff identified a market for jellynuts and plantains among expatriate
Dominicans and other West Indians in the United Kingdom. The cooperative supplying this market now exports 16 times the value of plantains each fortnight that it exported in its early months of activity in 1986.
Grapefruit and limes are two other long established crops
In Dominica, yet new markets have been found for both crops and various products have been developed from limes to supplement the sale of fresh fruit. Mangoes, avocados and various root crops are also being exported in increasing quantities, and so are fresh flowers, herbs and spices (including ginger).
DEXIA has worked in parallel with the existing cooperative of flower and ornamental growers to increase production of anthuriums, red ginger lilies and helleconia. New hybrid anthuriums have been introduced, and DEXIA has played a role in improving the quality of packaging.
20 point programme
As a statutory government body, DEXIA works to fulfil its brief either by increasing exports in response to existing production or in response to new markets.
Production-led export development is where existing crops are available and expansion of the market is sought to absorb surplus existing production. Market-led export development is where a new market is discovered, but either there is no existing production or existing production, does not match market requirements in terms of quality, quantity' or season of supply.
Two examples where new markets were identified were red peppers and christophines, both of which have long been grown in Dominica. A visit by a senior DEXIA staff member to Canada established that the market there demanded the Scotch Bonnet variety of red peppers and white christophines. Until then, it was rare to find pure Scotch Bonnet peppers in Dominica and most of the christophines grown were of the green variety, so production was changed to match the special needs of the newly identified market.
In some countries statutory marketing organisations provide the only outlet for some or all products and therefore dominate the market and the farmers. In Dominica government policy is that commercial activity shall be in the hands of the private sector. Therefore DEXIA'S role is to assist the private sector by helping to form groups of growers; by serving individuals and groups with market intelligence; by advising on transport, credit sources and insurance requirements; and by helping groups to negotiate with shipping and air lines to obtain must favourable terms
DEXIA may also test a new market by underwriting the supply of a pilot shipment but, once the needs of the market are established, it is left to the private sector to develop the new market opportunity. An example was when a company in France requested produce grown without ferdlizer or pesticides. Organically grown produce commands significantly higher prices and DEXIA, recognizing this as a potential new market, supplied a trial shipment of grapefruit, dried coconut and herbs. It will now be up to local growers to produce to the criteria specified and to supply further shipments.
<<Niche marketing>> is a new phrase for something that skilled traders have always recognised: in a competitive marketplace it is essential to recognize the precise needs of buyers and to judge how best your products can satisfy these needs. And, if a buyer demands a new product, this provides an opportunity for developing new lines of goods. Finally, high quality and efficient transportation remain as vital as ever.